The XpressWest train project’s deserved demise

WE’VE SEEN some bad policy ideas but not many more awful than the proposal to extend a $5.5 billion low-interest, 35-year federal loan to a West Coast start-up for a high-speed rail connection between Southern California and Las Vegas. This time, though, we are happy to report, common sense has prevailed: The Obama administration has stopped the project.

Backed by wealthy casino moguls, who in turn enjoyed the support of Senate Majority Leader Harry Reid (D-Nev.), a company called XpressWest wanted to lay tracks between Vegas and lonely Victorville, Calif., some 81 miles east of downtown Los Angeles. Several times larger than the largest amount ever loaned under the obscure federal Railroad Rehabilitation and Improvement Financing Program, the federal money would cover 80 percent of the project’s costs. The supposed public benefits were reduced carbon emissions, less auto traffic and, of course, more jobs.

What XpressWest struggled to explain was why taxpayers should bet on a proposition that private investors apparently found too risky: hordes of travelers driving to Victorville, parking their cars and then boarding the train for an 80-minute ride to Vegas — as opposed to driving the whole way, flying or taking “My Party Ride,” a limo-like bus trip for up to 30 passengers at $99 each, including food and drinks.

The whole thing had the makings of a boondoggle, for which taxpayers would eventually end up paying. Yet multiple federal and state agencies had given environmental and regulatory approvals, leaving the crucial matter of the loan up to the Transportation Department. Given the project’s political connections, DOT’s thumbs-up seemed inevitable — until June 28, when then-Secretary Ray LaHood, as one of his final acts in office, sent XpressWest Chairman Anthony Marnell II a letter saying that the department had decided to “suspend further consideration” of the loan.

The company, and Mr. Reid, issued statements asserting that the “review” would continue. Given Mr. LaHood’s allusions in his letter to “serious issues” and “significant uncertainties” — which “numerous meetings and telephone conferences” failed to settle — the project sounds pretty dead. If it ever got revived, it might face a Government Accountability Office inquiry, which House Budget Committee Chairman Paul Ryan (R-Wis.) and Jeff Sessions (Ala.), ranking Republican on the Senate Budget Committee, ordered in March but dropped last week in light of Mr. LaHood’s decision.

We’d like to think that cost and feasibility concerns ultimately derailed this crazy train, but that is not what Mr. LaHood emphasized in his letter. Rather, he faulted XpressWest for not guaranteeing that it would get steel and other manufactured goods from U.S. suppliers. We disagree with protectionist “Buy America” thinking; still, in this case it at least shows that the project’s job-creation potential was always limited by the fact that no U.S. manufacturer makes high-speed rail cars. However imperfect his rationale, Mr. LaHood reached the right result, and that’s cause for celebration.

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